U.S. residents lack meaningful choices for broadband providers that offer 25Mbps or faster download speeds, and the U.S. Federal Communications Commission will push for more competition, the agency’s chairman said Thursday.
While more than 93 percent of U.S. residents have access to a broadband provider, fewer than 15 percent can buy service from more than two wired providers that offer “yesterday’s broadband” with 4Mbps download speeds, FCC Chairman Tom Wheeler said during a speech at Washington, D.C., startup incubator 1776.
“At the low end of throughput … the majority of Americans have a choice of only two providers,” Wheeler said. “That is what economists call a duopoly, a marketplace that is typically characterized by less than vibrant competition.”
At faster speeds, there’s even less competition, Wheeler said. More than 19 percent of U.S. residents have no broadband provider offering 25Mbps service, and another 55 percent have only one such provider, he said. Less than 2 percent of U.S. residents can buy service from three or more broadband providers offering 50Mbps service.
“Communications policy has always agreed on one important concept: The exercise of uncontrolled last-mile power is not in the public interest,” Wheeler said. “This has not changed as a result of new technology.”
Wired, wireless on the agenda
The FCC, in a new agenda for broadband competition, will focus on opening up both wired and wireless broadband choices for U.S. residents, Wheeler said.
Even when U.S. residents have broadband choices, it’s not easy to switch providers, Wheeler said. In the 1990s, long-distance telephone customers could switch carriers monthly, but “that is not the reality” in today’s broadband market, with early termination and equipment rental fees, he said.
“Once consumers choose a broadband provider, they face high switching costs,” he said. “And, if those disincentives to competition weren’t enough, the media is full of stories of consumers’ struggles to get ISPs to allow them to drop service.”
In Wheeler’s new broadband competition agenda, the FCC will:
— Protect competition, including generally opposing merger efforts in the broadband industry. It’s unclear what this means for Comcast’s proposed acquisition of Time Warner Cable because the two companies don’t directly compete for customers.
— Encourage competition, including opening up new spectrum to mobile broadband and by pushing for net neutrality rules that ensure “the Internet remains free from barriers erected by last-mile providers,” Wheeler said.
— Work to create new competitors in place where “meaningful” competition is not available, he said. The FCC will push for more unlicensed wireless spectrum, and it is looking hard at state laws that prohibit or limit city-funded broadband networks, he said.
In some parts of the U.S., competition is working, Wheeler said. In places where Google and other companies have announced high-speed broadband networks, incumbent providers have, in some cases, announced network upgrades, he said.
But U.S. residents in urban areas are three times more likely to have access to higher-speed broadband than rural residents, he added. “As broadband needs increase, we cannot tolerate the broadband digital divide getting larger,” Wheeler said.
Digital rights group Free Press praised Wheeler’s remarks.
“Americans need faster broadband and real competition in the broadband market, and we welcome Chairman Wheeler’s intent to bring his agency into the 21st century,” Free Press policy director Matt Wood said by email. “Some of the chairman’s predecessors liked to pretend that slow DSL was still a viable and competitive option for innovators and consumers, so change on this front is long overdue.”
Wood called on the FCC to block “mega-mergers” like Comcast’s acquisition of Time Warner Cable. The FCC needs to take “concrete steps” to promote competition beyond giving speeches, he added.